Definition, Meaning & Synonyms

default-on-a-loan

Financial Term

dih-fawlt on uh lohn

Definition

A failure to fulfill the repayment terms of a loan as agreed upon in the loan contract.

Examples

After missing three consecutive payments, the borrower fell into default on the loan.
Defaulting on a loan can severely impact your credit score.
The bank issued a warning when it noticed signs of potential default on the loan.

Meaning

When a borrower does not pay back a loan according to the specified terms, it is considered a default. This can lead to penalties, increased interest rates, or even foreclosure of the secured asset.